U.S. solar provider SolarCity has narrowed its first quarter losses to just $21.5 million, compared to $24 million in Q1 2014, the company reported on Tuesday.
Higher-than-expected installations of 153 MW above the forecast projections of 145 MW helped the company post revenue of $67.5 million, which is a 6% increase year-on-year.
However, the company spent more than that figure on sales and marketing, plowing $86.7 million into this sector of the business as part of SolarCitys loss-making strategy that has enabled it to corner a vast portion of the U.S. residential solar market.
The companys model allows homeowners to spread payment for their solar installation over 20 years, meaning they avoid hefty upfront, one-off outlays that can be as much as $30,000. For SolarCity, the value of these energy contracts is seen as a more accurate way of assessing its financial state, and the company said that its 28,000 new customers are worth an additional $1.2 billion when the remaining life of contracts signed is tallied up.
Analyst at Robert W. Baird & Co, Ben Kallo, wrote in a note Tuesday that the company is unlikely to post a profit anytime soon, calling the company a long-term cash flow story, not a near-term profitability story.
In Q2, SolarCity expects to increase its installations further to 180 MW, and is targeting revenues between $86 million and $92 million. Over the course of 2015, SolarCity hopes to add 920 MW to 1 GW of solar systems, which would be around double the 502 MW installed last year.
The company has recently expanded into a range of new areas, including the recent rollout of a $1 billion commercial fund, the announcement of its GridLogic microgrid service, and last weeks confirmation that it will bundle its residential solar PV system with Teslas new Powerwall home energy storage system.